Justice Department Charges Founders of Mayweather-Backed ICO

3 April 2018

The Justice Department has filed charges against the founders of an initial coin offering endorsed by heavyweight champion Floyd Mayweather, Jr., adding to the allegations levied Monday by the Securities and Exchange Commission (SEC).

Sohrab Sharma and Robert Farkas were arrested and hit with charges of fraud, as CoinDesk previously reported after the SEC filed suit in the U.S. District Court for the Southern District of New York.

According to statements from the U.S. Department of Justice issued Tuesday, the two stand accused of “conspiring to commit, and the commission of, securities and wire fraud in connection with a scheme to induce victims to invest more than $25 million in investments through material misrepresentations and omissions.”

Centra’s pitch to investors included the claim that it would issue a credit card, but questions quickly arose about its purported relationship with payment giant Visa. That claim would later be referenced in the SEC’s complaint as well as the filings submitted by the Justice Department.

“The claims that Sharma and Farkas made to help secure these investments, however, were false. In fact, Centra Tech had no relationships with Bancorp, Visa, or Mastercard, and at least seven of those 38 states have no record of any such licenses being issued to Centra Tech,” officials said in a statement.

Data from CoinMarketCap shows that the token issued through the Central token sale has dropped sharply in value, sliding to less than $0.11 in the past day. Its price had exceeded $4 back in January, market data further shows.

Justice statue image via Shutterstock

This article has been updated for clarity.